updated 02:15 pm EDT, Wed April 7, 2010

Lenovo rumored to buy out Palm by investors

Hedge fund investors triggered a stock rush on Wednesday with speculation that Palm, which has recently suffered lower-than-projected sales and poor quarter earnings, may be taken over by PC maker Lenovo. While these are rumors, Palm's drop in stock prices makes it appealing to a takeover by other companies as well, and it's these same rumors that have in the recent short term boosted Palm's stock value.

None of the rumors said whether Lenovo would actually use webOS itself or simply use Palm's mobile experience to its own advantage for existing plans.

Lenovo's purchase of Palm could boost its penetration of the smartphone market, which it is itself trying to enter with Android-powered devices such as the LePhone. The device is expected to sport a 1GHz Qualcomm Snapdragon processor, a 3-megapixel camera, GPS and Wi-Fi, along with a touchscreen and hardware QWERTY keyboard. It is expected to arrive in China during the first half of this year. [viaCNBC]